The EU is one of the most important development partners of Lao PDR in terms of grant aid for development cooperation and humanitarian help, and also one of its most important trade partners. EU cooperation takes two forms: programmes funded by the EU budget and managed by the European Commission; as well as through bilateral initiatives of EU countries.
EU assistance to Lao PDR started during the early 1990s when the main priorities were rural development, urban development and support for refugees returning from Thailand. EU development aid to Lao PDR between 1993 and 2006 totalled approximately €100 million.
The 2007-2013 Country Strategy for Lao PDR allocated a total amount of EUR 69 million . The current seven-year allocation (2014-2020) has increased the funding for Lao PDR to EUR 207 million.
The current EU programme for Laos covers five years and is synchronised with the Lao PDR National Socio-Economic Development Strategy (2016-2020). It allocates EUR 162 million in three sectors: nutrition, education and governance under the framework of the European Joint Programming 2016-2020, which sets out a common vision, priorities, approach, division of labour and planned spending of the EU, EU Member States and Switzerland. Taken together, the EU and EU countries are the 4th biggest development donor in Laos, committing around EUR 70 million annually.
Supporting Lao PDR to achieve the SDGs
The EU has supported Laos in its efforts to achieve the Millennium Development Goals (MDGs), in partnership with the government and other development partners, and will continue to provide assistance for the achievement of the Sustainable Development Goals (SDGs).
The EU also recognizes and supports the efforts of Lao PDR to graduate from the group of Least Developed Countries (LDCs) by 2020. The National Socio-Economic Development Plan (NSEDP) is recognised as the Government’s development policy document and poverty eradication instrument with a five-year planning horizon (7th Plan 2011-2015; 8th Plan 2016-2020), and the EU follows its formulation and implementation closely, striving to align its support with it. The EU participates at the Round Table Meetings with the Government and with other development partners to assess progress and the challenges of development cooperation in Laos.
The EU works towards an increased level of coordination, aid efficiency and division of labour, with current support focusing mainly on economic and social development and reforms with a particular emphasis on better health and education services and on agriculture and rural development. The promotion of human rights, good governance and the sound management of public finances also feature prominently.
Programming cycle and types of Cooperation Instruments
EU funding is in the form of grants. For 2014-2020, the EU has simplified its funding toolkit so that there are now fewer instruments through which it provides external assistance.
The Development Cooperation Instrument (DCI) is the main instrument for EU operations in Asia. The budget allocated under the DCI for the period 2014-2020 is EUR 19.6 billion: EUR 11.8 billion for geographic programmes (of which EUR 207 million for Lao PDR), EUR 7 billion for thematic programmes, EUR 845 million for the Pan-African programme. Funding is allocated annually towards: Investing in People; Environment; Non-State Actors/ Local Authorities; Food Security; and Migration/ Asylum.
Other relevant instruments include: the European Instrument for Democracy and Human Rights (EIDHR) (more than EUR 1 billion for the period 2014-2020); the Instrument for Stability (more than EUR 2 billion for the period 2014-2020); and EU Humanitarian Aid (on average EUR 623 million per year).